TaxTMI 
TaxTMI 
2018 (8) TMI 1287
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....l products of Visakhapatnam Steel Plant (VSP). As per the contract, they are paid a consolidated rate per strap which includes the cost of strap, seal, consumables and labour involved. The appellants supply straps from their factory in Howrah to VSP under an invoice against Form 'C' given by VSP after paying Central Sales Tax (this being an inter-state sale). They pay Central Excise Duty and VSP takes CENVAT Credit of the duty so paid. VSP includes the cost of the work undertaken by the Appellant in valuing their final products for paying excise duty. Show cause notices were issued and demands were confirmed on the ground that activity undertaken by them falls under category of "Production or processing of goods" which falls in the definiti....
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....ducts, as they come out of the process line. These are either strapped while they are in the process (online) or after they have been taken out (offline) but all within the factory of the manufacture. It is his contention that strapping of these products is an activity incidental or ancillary to the manufacturing process itself and therefore it should be considered as manufacture only in terms of section 2(f) of the Central Excise Act, 1944. Once their activity is considered as manufacture, they cannot be charged service tax under "business auxiliary services" as they are specifically excluded from this provision. It is his further contention that they would have been liable to pay excise duty on this activity of strapping but they are doin....
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....x cannot be levied. That part, on going through the definition of the cargo handling service, it is very clear that the impugned items cannot be considered as cargo....." 5. As another alternative argument, he contends that the nature of their contract involves both supply of materials and service and hence it is in the nature of a composite works contract which was not taxable prior to 01.06.2007 as per the Apex Court's judgment in the case of L & T [2015 (39) STR 913 (SC)] and thereafter it can be classified as 'works contract service' under section 65(105)(zzzza) of the Finance Act but given the nature of their work they are not covered under this either. He sought to rely on the case of Manish Enterprises [2016 (42) STR 352 (Tri.-Mumba....
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.... Act, 1994. It is his further contention that the appellant is also not eligible for exemption under Notification No.8/2005-ST because there is no evidence that they are using the raw materials or semi-finished goods supplied by their client and are returning the goods back to them for use, in or in relation, to manufacture of any goods. Therefore, the appellant is also not covered by the exemption notification 8/2005-ST. Therefore, the appellant is clearly liable to pay service tax along with interest as confirmed in the Order-in-Original. It was the responsibility of the appellant to obtain service tax registration and pay the service tax which they have not done. Therefore, they are liable to payment of penalties imposed in the Orders-in....
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....ppellant that they are excluded from the definition of business auxiliary services by virtue of the proviso to the definition. We find it is the contention of the department that appellant is covered by section 65(19)(v) of the Finance Act, 1994 in as much as they are involved in the activity of production of goods on behalf of their client. The appellant does not dispute this and, in fact, he goes one step further and argues that their activity amounts to manufacture which we do not find so. Notification No.8/2005-ST dated 01.03.2005 reads as follows: "......the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of production of goods on behalf of the client refe....